it reaches far above the trend line, and surpasses all other peaks attained previously.
[*All dollar charts in this chapter and the one next following are so compensated. That is, the values for each year have been divided by the index o£ the average wholesale prices for that year, 1926 being considered as unity.]
Fig. 2. U. S. Manufactures, 1830-1945
Data decennial 1830-1899; quinquennial 1899-1919 with estimates for war years; biennial 1919-1939; annual estimates thereafter. The data have been adjusted for the purchasing power of the dollar, 1926 = 100.
A trend is shown projected tentatively to 1960. The war years, as the text explains, have been ignored in determining trend in this and in all other charts portraying growth. Ratio scale.
Unfortunately — for the purposes of our society — it represents production for purposes of destruction. Being a wartime phenomenon, it tells us nothing beyond the fact that under the centralized compulsion of a war economy we had an enormous capacity to produce.
The underlying trend line tells us much more. What that line says is this: Under the economic system prevailing before the war — to which we are presumably returning — we were closely approaching the upper limit of our ability toproduce and distribute within the frame of that system. Following its wartime peak, our volume of manufactures is bound to fall back toward the trend line, and perhaps well below it, before again stabilizing itself around the trend. Rather than a matter for philosophical argument, this assumption seems supported by the evidence of the pattern that has been established in our economy since the very beginnings of our nation — a pattern that can be approximately determined and, consequently, approximately projected.
Fig. 3. U. S. Merchandise Exports 1830-1945
Data decennial 1830-1910; annual 1910-1945. Data are adjusted for the purchasing power of the dollar, 1926 = 100. A trend is shown projected tentatively to 1960. Ratio scale.
When we compare the chart for manufactures with the charts that show rate of growth in our exports and imports (see Figs. 3 and 4), we meet a consistency that we should now be prepared to expect. Both exports and imports are measured here in dollars that are compensated for varying purchasing power, like the value of manufactured goods charted previously. Let us look first at Fig. 3 showing exports. The basic pattern established by the trend is undeniable, and it tells us something for the future. The export levels we established during World War II, by giving away almost unlimited volumes of goods via lend-lease, mean nothing — except that we did give these huge volumes of material away. In peacetime, our export volume should tend to return toward the true trend line — and perhaps sink below it for a while — unless we continue giving goods away in much the same fashion. Or unless a new trend is to be established, one we cannot now calculate.
Fig. 4. U. S. Merchandise Imports, 1830-1945
Data decennial 1830-1910; annual 1910-1945. Data are adjusted for the purchasing power of the dollar, 1926 = 100. A trend is shown, projected tentatively to 1960. Ratio scale.
Devices like the Bretton Woods Economic agreement, or Treasury grants made as political “loans” to foreign nations, may tend for temporary periods to mask this truism — much as the working of the Federal Reserve Act tends to conceal from the general public the fact that we print dollars to meet government deficits. But our chart says forthrightly, in statistical language, that on the basis of the long-established trend, and in terms of foreign trade handled at a real profit, we should not be too optimistic in looking for such trade to be increased over the prewar volume.
In other words, the pattern here shows what we have seen in other charts: We are approaching an upper limit of action, within the frame of our economy as it has long existed. If we now continue giving our goods away as in World War II — either as goods or in the form of uncollectible loans exchangeable for our goods — then of course we might presumably maintain any chosen volume of exports. But that method of exporting, if used in peacetime trade over any long period of time, will itself be a kind of revolution. All our chart can tell us is that, failing a revolution of some sort, the pattern as established will presumably prevail.
Merchandise imports, similarly charted for rate of growth in compensated dollars, tell us much the same story. Here, as in exports, (barring the period of World War II) the peak was reached in the decade that followed 1920. There seems no evidence to suggest that in our time, or in the frame of our economy as we know it, the peak of the twenties will ever be importantly exceeded. Certainly in a world where economic facilities outside the United States have been so extensively wrecked, and where the United States itself has an unprecedented volume of production facilities of its own, we hardly need a chart to tell us that levels of useful imports in the future will certainly not exceed, for any considerable period, those already established in the past. Not, that is, within the frame of familiar economic relationships.
Probably no industry so accurately mirrors progress in our industrialized economy — and, in turn, is mirrored in that progress — as does our iron and steel industry. Iron and steel are truly basic products in the machine age that has been with us for the last century and a quarter. They are tools in almost every “civilized” activity. That is why iron and steel production reflects both the physical and the psychological drives of a nation like the United States.
Fortunately for statistical purposes, the records for iron and steel production go back further, and are more nearly exact, than those for most of the other great American industries. By using pig iron production before 1913, and measuring steel output by steel ingot production after that date, we can trace the history of the industry’s activity back almost to its beginning.
Fig. 5. U. S. Iron and Steel Production
Shown in gross tons of 2240 lbs. each. Pig iron production 1830-1913 (decennial 1830-1850, annual 1854-1913). Steel ingot production 1914-1945. A trend is shown, projected tentatively to 1960. Ratio scale.
The steel industry has been an old industry since 1914. Note the curve showing its growth, in Fig. 5. The relapse it had around 1914 was normal in extent, as compared to all previous depressions that followed peaks in activity. But the next depression that came along, following World War I, carried steel production to lower levels than were reached in the 1914 relapse. The depression of the early thirties carried it to still lower levels. Such a series of sinking spells, each more serious than the last, would indicate in a human organism a slowly declining vitality. In the steel industry we may see, over a long period, a slowly declining rate of profit, and a rapid decline in the rate of growth, until as of 1939 that rate for the underlying growth trend was probably near zero.
The peak in steel production that occurred during World War II may be ignored, for purposes of significance in a creative and solvent economy. That fantastic peak did not represent creative construction to serve the purpose of man as an economic creature, but rather represented an explosion like that of aerial bombs which destroy themselves when they reach their target.
Steel production in whatever peace we enjoy hereafter promises ultimately to return to somewhere around the trend levels already established in the long history of the steel industry; it may even sink temporarily well below these levels — once it has supplied whatever pent-up needs consumers feel as
